CORRECTION: 6/18/14, 10:38 a.m. EDT. A previous version of this story misstated a date from Fish & Richardson’s press release in the seventh paragraph. We regret the error.
The Twin Cities will soon be home to the latest Am Law 100 firm to consolidate its back-office operations, as Fish & Richardson announced Tuesday that it expects to save $3 million per year by moving its administrative functions to its Minneapolis office.
Fish & Richardson has had an office in the city for 20 years, something that the firm’s Boston-based president and CEO Peter Devlin thinks differentiates it from other large firms that in recent years have opened low-cost operations centers in cities like Jacksonville, Nashville and Tallahassee, where they had not previously had a presence.
Devlin says that launching its own back-office base has been part of Fish & Richardson’s strategic plan for the past year. The firm hired a consultant early on to advise on the process—Devlin declined to name the individual—but over the past few months relied on its new management team to manage the particulars of moving 80 administrative positions to the Twin Cities by March 2015.
Fish & Richardson hired its first new chief financial officer in two decades last September in Daniel Lasman, who like Devlin is based in Boston. The firm’s chief operating officer is Richard “Rick” Anderson, a Minneapolis-based equity partner who founded the firm’s office in the city. (Anderson told the Minneapolis-St. Paul Business Journal and Star Tribune that most of those being transferred would come from Fish & Richardson’s offices in Boston, San Diego and Washington, D.C.)
The Minneapolis office already includes 36 lawyers, and Devlin says that Fish & Richardson will invest another $4 million in getting it ready to absorb the bulk of the firm’s accounting, finance, human resources and information technology functions in the hope of reducing administrative costs by some $3 million per year.
The firm did consider other markets, which Devlin declined to name, but soon focused on Minneapolis because of its substantially lower operating costs—such as the price of real estate—when compared with potential administrative hubs in cities like Boston or New York, where Fish & Richardson also has offices.
“We’re offering all of those affected the opportunity to visit Minneapolis, and if they chose to relocate, the firm will allow them to keep their salary and benefits,” says Devlin, adding that no Fish & Richardson employees will be let go as part of the move. A press release issued by the firm states that those who choose not to relocate can “keep their jobs in their current office until March 31, 2015,” upon which they “will be offered a generous severance package based on tenure if they stay through March 31.”
Last year Fish & Richardson let go of at least 14 paralegals and litigation support staffers as a result of changing market conditions for legal services, and like many Am Law 100 firms coping with the aftermath of the abrupt economic downturn of 2008-09, Fish & Richardson parted ways with more than 100 lawyers and staffers in several rounds of layoffs, which included the closure of its Austin office and paring down of its small corporate practice. (The Austin office later reopened.)
The now 344-lawyer firm, which according to sibling publication The National Law Journal saw its attorney head count dip 4.2 percent in 2013, is primarily known for its intellectual property expertise. Earlier this year, The American Lawyer named Fish & Richardson a finalist for its IP Litigation Department of the Year.
According to the most recent Am Law 100 financial data, Fish & Richardson saw gross revenue drop 9.6 percent last year, to $362.5 million, while profits per partner slipped another 12.1 percent, to $1.3 million.
Devlin says that “establishing operational efficiencies” and realizing greater cost savings—Fish & Richardson had available office space in Minneapolis—were factors in the firm’s decision to adopt the city as its new administrative center.
While Devlin declined to name those cities vying to host Fish & Richardson’s new back-office base, Michael Langley, CEO of a Minneapolis-based regional economic development organization that helped the firm analyze the merits of a relocation, told the Star Tribune that his city beat out competing locales in California, Georgia, Massachusetts and Texas. (Langley also said to the newspaper that the median salary for those staff jobs is $71,000 a year.)
Fish & Richardson joins at least a half-dozen other Am Law 100 firms that have made similar moves in recent years.
Orrick, Herrington, & Sutcliffe got the trend started more than a decade ago when it relocated its back-office functions to Wheeling, W. Va., just 40 miles away from where former firm chairman and CEO Ralph Baxter Jr. was raised. Over the next few years, other big firms followed Orrick’s lead.
In February, Sedgwick began shifting various administrative operations to a new outpost in Kansas City, Mo., which will open this summer. That came on the heels of Kaye Scholer consolidating 100 staffers in Tallahassee in 2013, Bingham McCutchen setting up shop that same year in Lexington, Ky., Pillsbury Winthrop Shaw Pittman opening in Nashville three years ago and Wilmer Cutler Pickering Hale and Dorr landing in Dayton back in 2010.
The Am Law Daily reported a year ago this month on big British firm Ashurst getting into the low-cost operations center game by announcing that it would open a base in Glasgow, Scotland’s largest city. The office officially began providing assistance to the firm’s global network this week, according to U.K. publication Legal Week.
The Lawyer, another U.K. legal publication, notes that London-based legal giants like Allen & Overy, Herbert Smith Freehills and even Hogan Lovells—the product of a late 2009 transatlantic merger involving an Am Law 100 firm—have adopted the process of sending lower-margin work to regional outposts.